Coffeehouse Culture: Coffee, tea, or CDs?

Another thing Jenny has pointed out is that while independent coffeehouses are generally crammed with tables, Starbucks stores often look like they could easily accommodate many more than they do. If that’s true, I’m not sure why. Some possibilities:

1. Lower store-specific loyalty? Starbucks’s brand-loyalty is pretty strong, but its store-specific loyalty is probably lower than any given independent shop’s. If an independent’s customers tend to be repeaters, they are more likely to be local and a higher percentage of them will sit compared to a Starbucks.

2. In a similar vein, if people choose Starbucks because it lowers search costs (there’s one right across the street from my preferred coffeehouse), but this suggests that a higher proportion of its customers will be visitors/tourists in a greater hurry and who will tend not to sit (although of course having to spend less time searching means they can spend more time sitting, but I don’t think this is significant). Of course, that could mean that a Starbucks can be smaller than an independent on average. I don’t think that’s true; on average Starbucks stores appear to be much larger.

3. Being larger, most Starbucks-type chains/franchises use floor space to sell items other than coffee and pastry – e.g., mugs, coffeemakers and coffee paraphernalia , CDs – while independents tend not to. So that makes the formers’ cost of adding another table higher. Perhaps independents don’t sell other stuff too because they have higher costs of acquiring those supplies because of smaller staffs, skill sets, or supply networks.

I know there are a lot of “ifs” and “mays” in all this, but it does look like there are two main business models working here.

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One of the implications of my previous Coffeehouse Culture post may be that coffeehouses are counter-cyclical. That doesn’t seem to be the case, however, as Starbucks is continuing with its plans to downsize. See here for example.

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4 thoughts on “Coffeehouse Culture: Coffee, tea, or CDs?”

Coffeehouses are very likely countercyclical, but Starbucks is just THAT awful. They probably never really made money on all these new locations, they just thought they would. When they realized either that three locations per block might be too many or that the bloom has simply worn off the Starbucks rose, they probably had to close locations whether in a boom or a bust.

I have no statistics to confirm this, but in personal experience, I see a much higher percentage of patrons go in, get their coffee, and immediately leave Starbucks than I do at an independent coffeehouse.
I see this happen even when seats are available, though I suppose it is possible it is intentional, that a small amount of seating, often full during rush times, might “dirty” the idea of sitting there generally. It is a little far-fetched, but possible.

All said though, they do make their money on selling coffee and sundry, not rent on sitting. They seem geared toward giving you your coffee and getting you out (they use to-go cups by default, for example). I imagine the limited seating is connected to that overall focus on maximum throughput.

The question being asked is why the crowds all of a sudden? My comment is that coffee houses are like local neighborhood bars, and as such are like our economy.

Interesting comments about Starbucks vs. Local coffee house but for my discussion I would like to throw them into the same pot.

When the economy is going well, people have jobs and need a bounce of Jo in the morning and throughout the day to put in that extra mile at work. Also people celebrate with their extra money they have made at work at the bars after hours and weekends during the good times.

When the economy sucks the people that do not have jobs need get out of the house in the morning and stretch their mind at the local coffee house (or Starbucks). And being frugal they wonder to the local bar for the afternoon happy hour to have a drink or two. And if time permits sit and wait around for a friend to buy them another before going home to meet the wife who is coming home from work.

Bars and coffee houses would not do well if unemployment was zero and people made just enough to pay their rent and expenses. They would be short on time and money.

Bars and coffee houses are both good businesses during the real good times and bad. And for whatever reason people seem to always spend their last five bucks (use to be $1) on coffee and booze (and cigarettes).

And back to my thoughts on Cycles – – It is my theory that coffee houses and bars are similar to our economy, where I must agree with a limited amount of others that business cycles per se do not exist. Their success or lack of is a direct relationship to the time and money of the employed and unemployed and not a business cycle. And yes I agree with Mario when he says it is a little more complicated than that as there are some additional factors such as the wife may want you to clean the house before your leave and/or limit the amount of money she leaves on the bureau.

Moving away from coffee, the next up business cycle in the US may be some time in waiting. It will come as it did in the past when the US can invent, manufacture and sell to rest of the world capital goods that are better and cheaper that adds to the quality of life. The US previously did just that when produced quality cars, planes, trucks, TVs, computers, PCs, software, radios, toasters, refrigerators, stoves, washers, and dryers. And now we are one a giant strip mall!

If things are going to change we really need to get up and smell the coffee. Soon! Otherwise there will be bigger crowds at the OB coffee house in the morning and PB Pub in the afternoon.